09.08.26 - What Last Year’s One Big Beautiful Bill Act Has To Do with Data Centers

Congress is out this week, having averted a government shutdown during last week’s House session. Lawmakers will be back in DC next week, but only briefly on the House side: they’ll head home on September 17 and stay there through the November election. 

There’s no shortage of topics the House could attempt to address next week. I say attempt because, of course, there’s no guarantee that anything the House does will advance in the Senate pre-midterms. House activity between Monday and Thursday will likely consist of messaging votes — i.e., a demonstration that the House is doing something about [insert your issue]. 

One option for a pre-recess House vote concerns a topic that’s become incredibly salient and, perhaps more incredibly, quite bipartisan as of late: data centers and their effects on the public. 

Some of that salience is due to President Trump’s recent declaration that communities opposing data center construction would end up “backwards and poor.” However, data centers were on the public’s radar long before the President’s assertion — and they were on congressional Republicans’ radar at least as early as last summer’s so-called One Big Beautiful Bill Act. I’ll explain. 

A quick refresh on the One Big Beautiful Bill Act

For folks who need a refresher: the One Big Beautiful Bill Act (OBBBA) was last summer’s GOP megabill that slashed funding for health care and food assistance to pay for massive tax breaks for the ultra-wealthy and corporations, while funneling billions of taxpayer dollars to the already-bloated Pentagon budget and the Trump immigration agenda. 

You can review our OBBBA overview published right before it passed here, but we’ve learned a lot more about the law’s impacts since then: about 5 million Americans have lost access to food assistance and 2.2 million have lost their health insurance — a figure that doesn’t even account for massive Medicaid cuts that will take effect next year. 

What does OBBBA have to do with data centers? 

Given OBBBA’s staggering effects on health care and food access, those implications tend to be front-and-center when we talk about this law. However, a lesser-known provision concerning “opportunity zones” has been in the spotlight this past week. The TL;DR is that OBBBA created tax incentives for corporations to build big projects in rural areas. The law doesn't include any new protections for communities or workers as a condition for using those tax breaks — meaning, the new construction has no special obligation to consider local communities' input or employ union labor.

Do those big projects have to be data centers? No. Can this tax break be used to spur data center construction? Yes — and, in fact, Republicans have indicated that encouraging data center construction was a key impetus for the provision. 

For one thing, the House’s version of OBBBA simply named the provision “Special Rule for Improvement of Existing Structures in Rural Areas, Including for Data Centers.” House Republicans also note that, with this provision in place, “the economic case for building data centers in designated rural opportunity zones becomes far more compelling.” Similarly, the White House describes OBBBA as “incentivizing the building of data centers.”

Why are people talking about this OBBBA tax break for data centers now? 

Because public opposition to data centers is skyrocketing. More than 70 percent of Americans don’t want new data centers built in their area, including majorities of Democrats, Republicans, and independents. What’s more, opposition to data centers is growing rapidly: one survey found a 12-point spike in opposition in just four months. 

I won’t go deep into all the reasons for that opposition within this newsletter — among them, the absence of community buy-in, strain on water resources and the electric grid, and rising utility bills. I strongly encourage you to check out We Build Progress’s explainer, How States are Approaching the Data Center Boom, which breaks down those reasons in detail! 

This begs the question, is Congress doing anything about this? Multiple reports in recent days discuss whether the House might vote this month on the Ratepayer Protection Act, a bill directing states to consider mirroring federal rules that would have tech companies cover data centers’ massive energy costs rather than consumers. While the House Energy and Commerce Committee unanimously passed the Ratepayer Protection Act earlier this summer, Republican leaders won’t commit to holding a vote pre-recess. So, the short answer to whether Congress will do anything about data center concerns pre-midterms is: TBD. 

This means that, absent a last-minute pivot, congressional Republicans’ big legislative accomplishment on data centers is a tax break for their construction. How that will land with an increasingly anti-data center public remains to be seen. 

If you’d like a live update for your group or coalition, reach out to catherine@webuildprogress.org. Thanks!